Michigan Bell Telephone Company , d/b/a Ameritech Michigan v. Climax Telephone Company

1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0025A (6th Cir.)
File Name: 00a0025a.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
M ICHIGAN BELL TELEPHONE
C OMPANY , d/b/a Ameritech
Michigan,
Plaintiff-Appellee,
v.
C LIMAX TELEPHONE
C OMPANY ,
Defendant,
J OHN G. S TRAND , J OHN C.
S HEA , and DAVID A.
S VANDA , Commissioners of
the Michigan Public Service
Commission (In Their
Official Capacities and not as
Individuals),
Defendants-Appellants,
UNITED S TATES OF AMERICA ,
FEDERAL C OMMUNICATIONS
C OMMISSION ,
Intervenors.
;>

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No. 98-1315

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2 Michigan Bell Telephone v. Climax
Telephone Co., et al.
No. 98-1315
Appeal from the United States District Court
for the Western District of Michigan at Grand Rapids.
No. 97-00197—Gordon J. Quist, District Judge.
Argued: April 29, 1999
Decided and Filed: January 18, 2000
Before: JONES, BOGGS, and COLE, Circuit Judges.
_________________
COUNSEL
ARGUED: David A. Voges, OFFICE OF THE ATTORNEY
GENERAL, PUBLIC SERVICE DIVISION, Lansing,
Michigan, for Appellants. John E. Muench, MAYER,
BROWN & PLATT, Chicago, Illinois, for Appellee. Susan
Pacholski, U.S. DEPARTMENT OF JUSTICE, CIVIL
DIVISION, APPELLATE STAFF, Washington, D.C., for
Intervenors. ON BRIEF: David A. Voges, David M.
Gadaleto, OFFICE OF THE ATTORNEY GENERAL,
PUBLIC SERVICE DIVISION, Lansing, Michigan, for
Appellants. John E. Muench, Robert M. Dow, Jr., Theodore
A. Livingston, MAYER, BROWN & PLATT, Chicago,
Illinois, Jeffrey V. Stuckey, Joseph A. Fink, John M.
Dempsey, Edward R. Becker, DICKINSON WRIGHT,
Lansing, Michigan, for Appellee. Susan Pacholski, Mark B.
Stern, U.S. DEPARTMENT OF JUSTICE, CIVIL
DIVISION, APPELLATE STAFF, Washington, D.C., for
Intervenors.
BOGGS, J., delivered the opinion of the court, in which
JONES, J., joined. COLE, J. (p. 13), delivered a separate
opinion concurring in part and dissenting in part.

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No. 98-1315 Michigan Bell Telephone v. Climax
Telephone Co., et al.
3
______________________
AMENDED OPINION
______________________
BOGGS, Circuit Judge. Climax Telephone Company
expanded its local exchange service into the service territory
of Michigan Bell Telephone Company, d/b/a/ Ameritech
Michigan (“Ameritech”). Climax petitioned the Michigan
Public Service Commission (the “PSC”) for arbitration of the
terms, conditions, and prices for interconnection and related
arrangements from Ameritech, under Section 252 of the
federal Telecommunications Act of 1996 (the “FTA” or the
“Act”), 47 U.S.C. § 252, and “the procedure adopted by the
[PSC’s] Order dated July 16, 1996, in Case No. U-11134.”
An arbitration panel rendered its decision, to which both
parties objected. The PSC rejected the objections, adopted
the arbitration panel’s decision, and approved an
interconnection agreement between the parties based on the
arbitration panel’s decision.
Ameritech sued Climax and the Commissioners of the PSC
in their official capacities, seeking declaratory and injunctive
relief against enforcement of the interconnection agreement.
The Commissioners moved to dismiss the complaint against
them, citing provisions of the Act, the doctrine of sovereign
immunity, and the Tenth and Eleventh Amendments. The
district court denied the motion, and the Commissioners
appeal its decision. We granted the Federal Communications
Commission (“FCC”) intervenor status, and now affirm the
judgment of the district court. Only the interlocutory appeal
is before us—the merits of the case have not yet been
considered below.
I
Climax is an established local exchange carrier (“LEC”)
serving the Climax, Michigan area. On July 30, 1996, Climax
filed an application with the PSC to provide local exchange
service in the greater Battle Creek and Kalamazoo, Michigan

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4 Michigan Bell Telephone v. Climax
Telephone Co., et al.
No. 98-1315
1The terms of the agreement are not important for purposes of the case
now before us. The primary dispute in the case underlying the present
appeal involves a term of the agreement that requires Ameritech to charge
Climax local rates to terminate calls originating within Climax’s large
local area (but outside Ameritech’s smaller local area), for which
Ameritech would otherwise charge toll rates. Ameritech argues that this
term is contrary to §§ 251 and 252 of the Act.
area, where Ameritech is the incumbent provider. The
application showed that Climax intended to establish a local
calling area covering the geographical area served by four
Ameritech local calling areas. In late 1996, Climax and
Ameritech began negotiating an interconnection agreement
and reached resolution on all but seven issues.
On March 10, 1997, just before the end of the statutory
period for timely filing of petitions for arbitration, see 47
U.S.C. § 252(b)(1), Climax petitioned for arbitration.
Pursuant to the procedures established in its opinion in case
number U-11134, the PSC assigned the matter to an
arbitration panel composed of two technical staff people and
one administrative law judge. See Case No. U-11134, 1996
WL 467772 (Mich. P.S.C. July 16, 1996). The panel
addressed the five open issues; on May 21, 1997, it adopted
Climax’s proposed resolution as to three issues, Ameritech’s
proposed resolution as to one issue, and found that the fifth
issue was not properly raised.
On June 25, 1997, the PSC adopted the decision of the
arbitration panel and ordered the parties to file the
interconnection agreement.1 One commissioner dissented.
On July 11, 1997, the parties filed the agreement. On July
25, 1997, Ameritech moved for a rehearing, which the PSC
denied on August 13.
On September 12, 1997, Ameritech filed a complaint in
federal district court against Climax and the PSC
Commissioners in their official capacity. Ameritech seeks
declaratory determinations that (1) certain sections of the
No. 98-1315 Michigan Bell Telephone v. Climax
Telephone Co., et al.
13
_____________________________________________
CONCURRING IN PART, DISSENTING IN PART
_____________________________________________
R. GUY COLE, JR., concurring in part and dissenting in
part. I am in complete agreement with the majority’s
disposition of the Commissioners’ Eleventh Amendment
claim. I write separately because I do not believe that this
court has jurisdiction to consider the interlocutory appeal of
the Commissioners’ other claims.
The Commissioners’ Eleventh Amendment claim is clearly
appealable under the collateral order exception. See Sault Ste.
Marie Tribe of Chippewa Indians v. Michigan, 5 F.3d 147,
149 (6th Cir. 1993). However, the Commissioners’ Tenth
Amendment and § 252 claims are not appealable collateral
orders because those claims are not “effectively unreviewable
on appeal from a final judgment.” See Coopers & Lybrand v.
Livesay, 437 U.S. 463, 468-69 (1978). In addition, those
claims do not fall under the doctrine of pendent appellate
jurisdiction because they are not “inextricably intertwined”
with the Eleventh Amendment claim, such that the Eleventh
Amendment claim could not be determined without first
addressing the nonappealable claims. See Chambers v. Ohio
Dep’t of Human Servs., 145 F.3d 793, 797 (6th Cir.), cert.
denied, 119 S. Ct. 408 (1998).
Accordingly, I would affirm the district court’s denial of the
Commissioners’ motion to dismiss based on the Eleventh
Amendment, but dismiss the Commissioners’ other claims for
lack of jurisdiction.

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12 Michigan Bell Telephone v. Climax
Telephone Co., et al.
No. 98-1315
the scope of a federal court’s inquiry, but it does not limit the
proper parties for suit.
III
On de novo review, the Commissioners’ claims in this
interlocutory appeal lack merit as a matter of law. The
Eleventh Amendment does not bar Ameritech’s suit because
Ameritech is seeking injunctive relief against an ongoing
violation of federal law. The Tenth Amendment does not bar
the suit because the federal government did not commandeer
state resources. Michigan chose to regulate interconnection
agreements. Finally, the Act does not jurisdictionally bar the
suit. Accordingly, the district court’s denial of the
Commissioners’ motion to dismiss is AFFIRMED and the
case is REMANDED for trial.
No. 98-1315 Michigan Bell Telephone v. Climax
Telephone Co., et al.
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agreement violate the Act, the implementing regulations, state
law, and the United States Constitution, and (2) the PSC lacks
jurisdiction to decide one of the issues. Ameritech also seeks
to enjoin enforcement of those sections of the agreement, and
to reform the agreement.
On November 24, 1997, the Commissioners moved to be
dismissed as defendants, on grounds that (1) the district court
lacked personal jurisdiction over them and (2) Ameritech
failed to state a claim on which relief can be granted. The
district court heard oral argument and denied the motion. The
Commissioners appeal the denial of their motion to dismiss.
This court ordered the Commissioners to show cause why the
appeal should not be dismissed for lack of jurisdiction. See
6th Circuit Docket, Case No. 98-1315, March 25, 1998. On
the Commissioners’ further showing, the order was
withdrawn on the ground that district court orders denying
dismissal on Eleventh Amendment grounds are appealable
collateral orders. See Order, Case No. 98-1315, April 16,
1998.
II
Where the district court bases its denial of a motion to
dismiss for failure to state a claim purely on the legal
sufficiency of the plaintiff’s case, we review the decision de
novo. See Barrett v. Harrington, 130 F.3d 246, 251 (6th Cir.
1997) (citing RMI Titanium v. Westinghouse Electric Corp.,
78 F.3d 1125, 1134 (6th Cir. 1996)). All factual allegations
in the complaint are accepted as true. Nishiyama v. Dickson
County, 814 F.2d 277, 279 (6th Cir. 1987) (en banc).
“Where a trial court’s ruling on jurisdiction is based in part
on the resolution of factual disputes, a reviewing court must
accept the district court’s factual findings unless they are
clearly erroneous. However, review of the district court’s
application of the law to the facts is de novo.” RMI Titanium
v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir.

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6 Michigan Bell Telephone v. Climax
Telephone Co., et al.
No. 98-1315
1996) (internal citations removed) (citing Ynclan v. Dep’t of
the Air Force, 943 F.2d 1388, 1390 (5th Cir. 1991)).
Questions of statutory interpretation, like all matters of law,
are reviewed de novo. See United States v. Brown, 915 F.2d
219, 223 (6th Cir. 1990).
A. The Telecommunications Act of 1996
Congress enacted the FTA to promote competition in all
telecommunications markets, including the local service
market. See H.R. Conf. Rep. No. 104-458, at 113 (1996),
reprinted in 1996 U.S.C.C.A.N. 124. Title I, Part II of the
Act provides standards and procedures to allow startup
carriers to interconnect their networks to the incumbent
carrier’s network, to access the incumbent carrier’s network
elements piece-by-piece, to purchase the incumbent carrier’s
retail services “at wholesale rates” for resale, and to access
the incumbent carrier’s physical infrastructure and facilities
for connection purposes. 47 U.S.C. §§ 251(b)(4) and
251(c)(6). The Act contemplates that state public utility
commissions will assume regulatory authority over
interconnection agreements; if a state chooses not to do so “in
any proceeding or other matter under this section,” the FCC
will assume regulatory authority “with respect to the
proceeding or matter.” 47 U.S.C. § 252(e)(5).
The Act requires incumbent providers to negotiate in good
faith with new entrants; if the parties cannot resolve their
differences, either party may petition the regulatory authority
for arbitration of the unresolved issues. See 47 U.S.C.
§§ 251(c), 252(b). The arbitration panel “shall limit its
consideration of any petition [for arbitration] (and any
response thereto) to the issues set forth in the petition and in
the response, if any . . . .” 47 U.S.C. § 252(b)(4)(A). The
arbitration panel must ensure that its resolution meets the
requirements of § 251 and the FCC regulations implementing
§ 251, see 47 U.S.C. § 252(c)(1), and the regulatory authority
may reject an arbitrated resolution only if it does not meet
No. 98-1315 Michigan Bell Telephone v. Climax
Telephone Co., et al.
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The Commissioners’ Tenth Amendment argument is also
unavailing. The Commissioners argue that the doctrine of
New York v. United States, 505 U.S. 144 (1992), and Printz
v. United States, 521 U.S. 98 (1997), prohibits Ameritech’s
suit as a “commandeering” of state resources. Michigan
chose to regulate interconnection agreements under the Act.
It could have chosen not to participate, in which case it would
not have arbitrated and reviewed the agreement between
Ameritech and Climax. Michigan did, in fact, arbitrate and
review the agreement, precisely the action complained of.
The state cannot have it both ways. The United States did not
compel its actions and, consequently, the Tenth Amendment
does not bar Ameritech’s suit. See, e.g., New York, 505 U.S.
at 167, 179 (Congress may offer the states a choice of
regulating activity); FERC v. Mississippi, 456 U.S. 742, 768
(1982).
Finally, the Commissioners argue that they are not proper
parties under § 252(e)(6). They point out that § 252(e)(6)
provides that “[i]n any case in which a State commission
makes a determination . . . , any party aggrieved by such
determination may bring an action in an appropriate Federal
district court to determine whether the agreement . . . meets
the requirements of section 251 [and 252],” arguing that the
other party to the agreement is the only proper parties for suit.
This argument misses the point. The heading of subsection
(e)(6) is “Review of State commission actions” (emphasis
added). It is the PSC’s duty, if it chooses to regulate, not the
other party’s, to ensure that the agreement meets the
requirements of the Act both at the time of arbitration, 47
U.S.C. § 252(c), and at the time of approval, 47 U.S.C.
§ 252(e)(2)(B). Furthermore, it is the PSC’s function, not the
other party’s, to enforce the agreement. Lacking power to
enjoin the PSC from enforcing the approved agreement,
federal courts would have little effective remedy for aggrieved
plaintiffs, or would subject companies to the intolerable
prospect of conflicting commands from federal courts and
state regulatory agencies. The language quoted above limits

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10 Michigan Bell Telephone v. Climax
Telephone Co., et al.
No. 98-1315
v. Arte Publico Press, 157 F. 3d 282 (5th Cir. 1998)). Accord Bell
Atlantic-Md., Inc., v. MFS Intelenet of Md., Inc., Civil Case No. S 99-
2061 (D. Md. Oct. 29, 1999).
The Ex parte Young doctrine operates as an exception to the
general rule of sovereign immunity that states may only be
sued with their consent. Under Ex parte Young, suits against
state officials seeking equitable relief for ongoing violations
of federal law are not barred by the Eleventh Amendment. Ex
parte Young, 209 U.S. at 159-60. The PSC not only approved
the interconnection agreement, it is responsible for ongoing
enforcement of the agreement. Ameritech alleges that the
agreement violates federal law, and is seeking equitable relief.
Taking the alleged facts as true, as we are required to do when
reviewing a dismissal for failure to state a claim, Ameritech
has stated a claim against the Commissioners, and thus
against the state of Ohio, for equitable relief from an ongoing
violation of federal law. Under Ex parte Young, Ameritech
is entitled to proceed.
Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996)
and Idaho v. Coeur d’Alene Tribe, 521 U.S. 261 (1997), do
not affect the application of Ex parte Young to § 252 cases.
Recently, the Supreme Court once again affirmed the vitality
of Ex parte Young, even while strongly reaffirming states’
rights against suit. See Alden v. Maine, ___ U.S. ___, 119 S.
Ct. 2240, 2266-68 (1999) (sovereign immunity does not bar
certain actions against state officers for injunctive or
declaratory relief) (contrasting Ex parte Young with Seminole
Tribe and Coeur d’Alene Tribe).
If Ameritech is correct in its claim that the agreement
violates federal law, the PSC’s ongoing enforcement of the
interconnection agreement constitutes an ongoing violation of
federal law, against which Ameritech seeks injunctive relief.
Therefore, under Ex parte Young, the Eleventh Amendment
does not bar Ameritech’s suit against the Commissioners.
No. 98-1315 Michigan Bell Telephone v. Climax
Telephone Co., et al.
7
those requirements, see 47 U.S.C. § 252(e)(2)(B). When a
state acts as the regulatory authority, “any party aggrieved by
[its] determination may bring an action in an appropriate
Federal district court to determine whether the agreement or
statement meets the requirements of section 251 of this title
and this section [252].” 47 U.S.C. § 252(e)(6). The Act
expressly deprives state courts of jurisdiction to review the
approval or rejection of an agreement by state regulatory
authorities. See 47 U.S.C. § 252(e)(4).
B. Issues Presented on Appeal
The Commissioners raise four issues: (1) whether they are
proper parties in a federal court action filed pursuant to 47
U.S.C. § 252(e); (2) whether the Eleventh Amendment bars
naming the Commissioners in this suit; (3) whether the PSC,
in arbitrating the agreement, waived sovereign immunity; and
(4) whether the Tenth Amendment bars naming the
Commissioners in this suit. Ameritech raises the issue of
whether this court has jurisdiction to conduct interlocutory
review of the Commissioners’ “proper parties” and Tenth
Amendment claims.
Ameritech and the FCC both cite numerous district court
cases, twenty-three altogether, each of which denies the state
regulatory agency’s motion to dismiss. Recently, the Seventh
Circuit became the first appellate court to consider the issue.
MCI Telecommunications Corp. v. Illinois Commerce
Comm’n, 168 F.3d 315 (7th Cir. 1999). The panel rejected
the Commissioners’ Eleventh Amendment argument and
affirmed the district court’s denial of their motion to dismiss.
C. Jurisdiction to Decide the Appeal
“Ordinarily, appellate jurisdiction is lacking to hear an
appeal from an order denying a Rule 12(b)(6) motion to
dismiss since such an order is interlocutory in nature.” Suarez
Corp. Indus. v. McGraw, 125 F.3d 222, 225 (4th Cir. 1997);
see also Hill v. New York, 45 F.3d 653, 659 (2d Cir. 1995) (“a

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8 Michigan Bell Telephone v. Climax
Telephone Co., et al.
No. 98-1315
denial of a motion to dismiss is ordinarily considered non-
final, and therefore not immediately appealable”).
The Commissioners invoke the jurisdiction of this court
pursuant to 28 U.S.C. § 1291 and the collateral order doctrine
of Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541,
545–46 (1949). “The courts of appeals . . . shall have
jurisdiction of appeals from all final decisions of the district
courts of the United States.” 28 U.S.C. § 1291. To be
appealable as a collateral order, a district court’s order must
1) conclusively decide the disputed issue; 2) resolve an
important issue separate and independent from the merits of
the action; and 3) be effectively unreviewable on appeal from
a final judgment. Coopers & Lybrand v. Livesay, 437 U.S.
463, 468–69 (1978). The Commissioners assert that their
Tenth and Eleventh Amendment claims were conclusively
determined by the district court, that they are completely
separate from Ameritech’s claim that the agreement is
inconsistent with federal law, and that they would be
effectively unreviewable on appeal from a final judgment.
The Commissioners also argue that the Tenth Amendment
claim is “inextricably intertwined” with their other claims,
and assert jurisdiction under the doctrine of “pendent
appellate jurisdiction.” See Chambers v. Ohio Dep’t of
Human Servs., 145 F.3d 793, 797 (6th Cir. 1998).
Ameritech concedes that this court has jurisdiction to hear
the Commissioners’ Eleventh Amendment claim. See Puerto
Rico Aqueduct and Sewer Authority v. Metcalf & Eddy, Inc.,
506 U.S. 139, 142–48 (1993); Sault Ste. Marie Tribe of
Chippewa Indians v. Michigan, 5 F.3d 147, 149 (6th Cir.
1993). Ameritech argues that this court does not have
jurisdiction to hear the claim that the Commissioners are not
proper parties, nor the claim that the Act violates the Tenth
Amendment. The district court’s order is not a proper
collateral order with respect to either claim, Ameritech
contends, nor is either claim “inextricably intertwined” with
the Eleventh Amendment claim to confer jurisdiction. See
Chambers, 145 F.3d at 797 (“pendent appellate jurisdiction
No. 98-1315 Michigan Bell Telephone v. Climax
Telephone Co., et al.
9
2Similarly, the Seventh Circuit recently decided MCI
Telecommunications Corp. v. Illinois Commerce Comm’n, 168 F.3d 315
(7th Cir. 1999), against the Illinois Commissioners. Although we agree
with the result, we do not base our decision on the reasoning in that case
because the court reached its decision by applying the constructive waiver
doctrine, which has since been limited by the Supreme Court in College
Savings Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 119
S. Ct. 2219 (1999), and did not reach the Ex parte Young issue. See MCI,
168 F.3d at 320-23, amended 183 F.3d 558, 564-67. The Seventh Circuit
has subsequently granted rehearing en banc on this opinion. 183 F.3d
567-68.
On March 29, 1999, the Middle District of Louisiana apparently
became the first court to grant immunity to a state regulatory body. See
AT&T Communications of South Central States v. Bellsouth
Telecommunications, Inc., 43 F. Supp. 2d 593 (M.D. La. 1999). The
court considered itself bound by Fifth Circuit precedent interpreting
Seminole Tribe as extinguishing waiver. See id. at 600-01 (citing Chavez
. . . only may be exercised when the appealable issue at hand
cannot be resolved without addressing the nonappealable
collateral issue”). Clearly, the Eleventh Amendment claim
can be resolved without resolving either of the other claims.
All of the Commissioners’ claims are separate and
independent of the issue of whether the agreement is
consistent with federal law, have been conclusively decided
below, and would be effectively unreviewable on appeal from
a final judgment. We must decide the Eleventh Amendment
claim in any event, and it would be a waste of judicial
resources not to hear the other claims now. Finally, all of the
Commissioners’ claims are unavailing.
D. Discussion
Although the Commissioners disagree, the case before this
court is a straightforward Ex parte Young case. See Ex parte
Young, 209 U.S. 123 (1908). Most district courts that have
addressed this issue have applied the Ex parte Young doctrine
and denied the state regulatory authorities’ motions to
dismiss.2 We now do the same.

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